South Korea Expands Industrial Security Checks to Key Manufacturing Sectors

The South Korean government is broadening its industrial security checks to include key manufacturing sectors such as machinery, batteries, and automobiles, following its focus on semiconductors and artificial intelligence. This expansion comes amid increasing export controls from major countries and heightened competition for securing critical minerals, underscoring the importance of managing supply chain risks.

On June 16, the Ministry of Trade, Industry and Energy held the second public-private industrial security dialogue in Gangnam, Seoul, with major companies and relevant associations from the machinery, battery, and automobile sectors.

Recently, several countries have intensified controls over advanced technologies and key manufacturing sectors citing national security concerns. Regulations surrounding rare earth elements, critical minerals, and dual-use items have expanded, impacting companies' procurement of raw materials and export activities. Industry experts note that reducing dependence on specific countries and diversifying supply chains have emerged as new management challenges.

During the meeting, discussions included export controls on dual-use items from major countries, enhanced management of rare earths and critical minerals, and trends in international export control systems. The ministry also conducted individual interviews with companies to identify potential risks by sector.

In the machinery sector, the management of exports for advanced machine tools was a key agenda item. These tools can be used in military applications, making them a focus of international export controls. The ministry explained compliance obligations regarding end-use verification and export licensing procedures for target countries, and gathered suggestions for system improvements.

In discussions with the battery industry, the focus was on securing raw materials for cathodes and anodes. With countries tightening export controls on domestic minerals and raw materials, ensuring a stable supply of these materials has become a critical issue for the industry. Both the government and industry representatives acknowledged the need to diversify supply chains by exploring alternative sources.

The automobile sector examined risks not only in upstream supply chains involving rare earths and minerals but also in downstream supply chains related to vehicle semiconductors and electronic components. Given the complex supply chain of the automotive industry, which includes engines, motors, bodies, and electronic parts, there are significant concerns that disruptions in the supply of specific items could impact overall vehicle production.

The Ministry of Trade, Industry and Energy initiated public-private industrial security dialogues in April, starting with the semiconductor and AI sectors. Following the discussions on machinery, batteries, and automobiles, the ministry plans to expand talks to include defense, robotics, and aerospace sectors in the second half of the year.

Kim Tae-woo, Director of Trade Security Policy at the Ministry, stated, "Our manufacturing sector is facing complex challenges in a rapidly changing economic security environment. We will support the export industry to secure irreplaceable core technologies and enhance competitiveness in terms of industrial security, going beyond mere compliance with regulations."